Is super strength optional?

Yes and no.

SUPER STRENGTH (OPTIONAL): When this character moves as part of a move action, power action, or free action, it can pick up an object as a free action and carry it. The object must be either in a square the character occupies or in an adjacent square. This character can use an object it picks up as a weapon. If this power is lost or countered while this character is holding an object, immediately place the object in the square this character occupies. This power can’t be canceled while this character is carrying an object. When this character makes a close combat attack targeting blocking terrain, a wall, or an object, modify its damage value by +2 for the attack; if the character is carrying an object when it makes the
attack, remove the object from the game.

So it's optional in that you don't have to use SS and pick up an object as you move adjacent to it. But once you pick up an object you can't cancel (turn off) SS and drop the object. Once you pick it up, you keep it until you use it, or lose SS off the dial via damage or Outwit from an enemy fig.

Tarnish

These two lines caused some confusion with my judges that I feel needs clarified. Last time I played they told my opponent that he could not outwit Super Strength on my Liberty Belle while she was carrying an object, because of the second line saying it couldn't be canceled. It appears to me that they were correlating canceled to countered, where the (admittedly dubiously defined) game effects of those words are different.

So was I right that he could outwit Super Strength and make Libby drop the object, or are they right that if the object is in hand it stays there?

Your right.. Once a power is countered the powers it possessess stop bieing À la dropping the object... Your Superman just became a weakling... Voilá!

-Hypersonic90

Once you pick an object up you can't drop it unless you are Outwitted.

OR you lose the power via pushing/taking damage.

For the record, Outwit does not cancel powers, it counters them.
"Cancel" in Heroclix terms means "choosing to turn off the power".

Good point.

You are absolutely correct!

You can drop objects with Separation Field Generator in addition to Outwit.

-Hypersonic90